From the bank's point-of-view, bad debt must be minimized as a priority and future bad debts to be avoided. This is more likely to happen to properties bought with little buyer's own equity. Agree only in the sense that it won't happen across the board.
Payment is only one side of the equation.
If the bank values a property (for argument sake say 30% less than the value of the loan), then anticipating a fire sale in a future default means the bank only recovers 70% for example, then the bank will act.
Banks aren't charity organizations. They will provide as much breathing space to the mortgagees in trouble in the good times out of good PR. When the crash comes, it's back to protecting their balance sheet.
Despite, most mortgage loans being written out by the Big4 since the GFC, there are still numerous secondary and tertiary loans outstanding where lenders foreclose just after a month or two of failure to repay.
Foreclosures will be fast and furious by the end of the 1Q 2010. Just around the corner.
